y LISA SINGHANIA

AP Business WriterNEW YORK (AP) -- New troubles in the telecom sector sent stocks sharply lower Monday as Wall Street looked past evidence of healthy consumer spending and worried that business won't recover enough to justify higher stock prices.

Analysts said investors were becoming even more reluctant to invest for fear stocks are in for a third straight disappointing year. Trading volume was light -- another indication that buyers are staying away. Even relatively cheap stock prices after last week's big selloff failed to lift stocks.

"The overall pressure that tells you there isn't enough oomph to get a new bull market, even from these levels," said Charles Pradilla, chief investment strategist at SG Cowen. "There are real questions as to how sustained the recovery is going to be as far as profits are concerned, and people are worried."

The Dow Jones industrial average closed down 90.85, or 0.9 percent, at 9,819.87, according to preliminary calcuations, its second straight close below and 10,000 and weakest finish since Feb. 19, when it stood at 9,745.14.

Broader stock indicators also slipped. The Standard & Poor's 500 index fell 10.87, or 1.0 percent, to 1,065.45, while the Nasdaq composite index dropped 6.96, or 0.4 percent, to 1,656.93. Both indexes are now trading at levels last seen in October.

The Commerce Department reported consumer spending and incomes rose by 0.4 percent in March. The figures were in line with analysts' expectations and provided more evidence that consumers, who account for two-thirds of the economy, are still spending.

That wasn't enough to impress investors, who increasingly agree that the economy is in a recovery but have yet to see similar indications in business. This week marks the end of first-quarter earnings reporting season, but so far, most of the numbers already released have failed to convince investors that profits are strong enough to justify higher stock prices.

As a result, the market has become increasingly skittish, interpreting any signs of weakness in a company or sector as reason to sell.

In trading Monday, Qwest Communications fell 77 cents to $4.98 as a judge in Minnesota began hearing evidence over confidential agreements the company had made with competitors. The broader sector also retreated. Worldcom shares tumbled 92 cents, or 28.1 percent, to $2.35, a new 52-week low. SBC Communications, which is also a telecom company, lost $1.25 to $30.15, while AT&T tumbled 45 cents to $12.85. SBC and AT&T are also Dow components.

Tyco slid $2.95 to $16.95 as part of a continuing selloff that began late last week when the company changed its mind about splitting up.

And DuPont fell 73 cents to $43.17 on word its textile business would cut more than 2,000 jobs, or 10 percent of its global work force. DuPont also indicated it will take a second-quarter charge of 12 cents to 16 cents a share, because of employee separation costs and asset shutdowns.

Monday's selloff was the latest in a monthlong pullback by stocks that has accelerated in recent sessions. Investors had started April hoping that first-quarter earnings and outlooks would provide a catalyst for a new bull market rally. That didn't happen, however. Although earnings have met mostly reduced expectations, companies have failed to forecast strong profits ahead. As a result, investors have shied away or, when the market does blip up, sold to collect profits.

Last week alone, the Nasdaq dropped 7.4 percent while the Dow lost 3.4 percent and the S&P fell 4.3 percent.

The figures are even more depressing year-to-date. Since the start of 2002, the Dow has dropped 2 percent, the Nasdaq has fallen 15.1 percent and the S&P is down 7.2 percent.

"There's really not a whole lot to get excited about right now," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "This is just more follow through on the weakness we've been seeing."

Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to 1.25 billion shares, compared with 1.37 billion Friday.

Also Monday, the Russell 2000 index fell 0.96 to 500.54.

Overseas, Germany's DAX index rose 0.2 percent, Britain's FT-SE 100 fell 0.1 percent, and France's CAC-40 lost 0.5 percent. Japan's Nikkei stock average did not trade because of a national holiday.

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